The Economic Impact of Orange County’s Airport’s Mexico Connections

The OC probably isn’t thrilled that inbound Mexico tourism has become so important to its business, but it does speak to its growth potential for in- and out-bound international flights.

— Jason Clampet

Share

Tweet

Share

Post

Send

John Wayne Airport‘s year-old Mexico air service has not only boosted passenger traffic but given a $131 million shot in the arm to the regional economy, according to an economic impact study released by the airport Thursday.

The study, conducted for John Wayne by InterVISTAS Consulting LLC in Washington, D.C., said that total economic impact translates into the equivalent of 990 full-time jobs and $39 million in wages, salaries and benefits tied to the airport.

“It shows the international service from Mexico truly benefits our economy,” said Jenny Wedge, airport spokeswoman.

Mexico passenger service was first launched in Orange County in June 2012 when AirTran, a subsidiary of Southwest Airlines, began once-a-day flights to Mexico City and to Cabo San Lucas. (The airline added a second Cabo flight just for this summer.)

Interjet, a Mexican national air carrier, initiated service at John Wayne in October 2012 with one daily flight each to Mexico City and to Guadalajara.

Through the first nine months of this year, the new Mexican flights accounted for 292,000 of the 6.9 million travelers flying through Orange County, or about 4.2 percent.

Esmael Adibi, an economist at Chapman University, said there is no question the new Mexico air service had economic benefits. But he cautioned that these studies tend to exaggerate the extent to which travel dollars ripple out through the economy. These studies also often don’t take into account whether this airline service provides a new economic impact or simply dollars that shifted from Mexico travelers using Los Angeles International over to Orange County, he said.

Steve Martin, the senior vice president at InterVISTAS who oversaw the $17,000 study, recognized these potential pitfalls and said the company used conservative numbers.

For instance, he said that while the economic impact included estimated spending on hotel stays, food and entertainment, it did not use the indirect impact of things like the linens hotels buy for rooms or the food purchased by restaurants to produce meals.

He said the study’s outcome is important because it didn’t just show the actual economic impact of John Wayne’s new Mexico air service but also demonstrates to both U.S. and Mexican air carriers the viability of Orange County for new service.

“It showed that the potential upside (for growth) is even better than the additional (passenger) numbers they have now,” said Martin, who has also conducted recent economic impact reports for the Denver International and Minneapolis-St. Paul International airports.

John Wayne officials said that one benefit of the steady growth in international service is that the airport may now qualify to have the federal government take over the $1.6 million annual cost of providing customs service, which has been paid by the airlines.

Although John Wayne had international flights to Canada before the Mexico flights, travelers cleared customs in Canada, so the service wasn’t required in Orange County.

With the addition of the Mexico flights, John Wayne had to take on the cost of providing customs until the airport could show it consistently served more than 15,000 annual international passengers. The airport has well exceeded that number, averaging 33,000 international passengers a month this year.

As a result, the airport applied this week to U.S. Customs and Border Protection to designate John Wayne Airport as an official port of entry. In its letter to the port director, the airport notes John Wayne’s international passenger traffic now exceeds travel at five other California airports that are ports of entry: Oakland, Ontario, Palm Springs, Sacramento and San Jose.